The Ministerial Council on Energy (MCE) has provided the Terms of Reference to the AEMC. The Review will assess how both the introduction of the Carbon Pollution Reduction Scheme (CPRS) and the expanded Renewable Energy Target may affect Australia’s energy market frameworks, as well as determine which, if any, amendments to those frameworks would be needed as a result.
Dr Tamblyn said that energy markets in Australia are well designed and functioning to internationally respected standards of efficiency.
“AEMC decision making is guided by the objectives set by the National Electricity Law (NEL) and the National Gas Law (NGL). Reviews conducted by the AEMC must have regard to these objectives, which are to promote efficient investment in, and efficient use of, electricity and natural gas services for the long term interests of consumers with respect to price, quality, reliability and security of supply.
“The outcomes of the Review will provide advice to the MCE on adjustments that may be necessary to the energy market frameworks so that the objectives of the NEL and NGL can continue to be met,”? Dr Tamblyn said.
Dr Tamblyn noted that the planned introduction by the Australian Government of the CPRS and expanded national target for renewable generation will influence a wide range of economic activity.
He said that now, ahead of the implementation of these new policies, is an opportune time to review whether the energy frameworks need to be amended in order to ensure that the markets continue operating efficiently and reliably in the interests of consumers, due to the changed commercial incentives and behaviour these policies will create.
“We welcome the Ministers’ request for advice on this matter and look forward to engaging with our stakeholders on these important issues,”? Dr Tamblyn said.
The MCE asked the AEMC to establish a stakeholder Advisory Committee comprising energy market operators and planners, regulators, industry and energy end user groups. The Committee had its first meeting on 8 September, the purpose of which was to discuss the broad areas of scope and potential range of issues for the Review.
The Scoping Paper was published on 10 October 2008, outlining key relevant issues to the Review and inviting submissions. Stakeholder responses to the Scoping Paper will help refine the Review’s approach for input to the First Interim Review Report, expected to be released by 31 December 2008.